New research studying the impact of government-mandated minimum wage hikes found exactly what critics of such policies predict: The cost is pushed onto consumers.
Proponents of hiking the federal minimum wage to $15 argue that every American is entitled to earn a “living wage” and that no person should work hard each week, yet still live below the poverty line.
But if the government forces businesses to increase their wages, Princeton economist Orley C. Ashenfelter and Czech economist Štěpán Jurajda found through studying price and wage data from nearly every McDonald’s restaurant in the U.S., businesses themselves do not cover the cost of increased wages.
Instead, they found that businesses simply pass that cost on to consumers.
“Our data imply that McDonald’s restaurants pass through the higher costs of minimum wage increases in the form of higher prices of the Big Mac sandwich,” the researchers said.
Indeed, businesses will incur significant cost increases if politicians hike the federal minimum wage to $15 per hour, which would be more than double the current standard. For companies that employ large numbers of low-skilled positions, monthly payrolls would ballon thousands of dollars per month, at minimum. – READ MORE
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